The United Kingdom recently repealed a stamp duty in an attempt to entice exchange traded fund providers to set-up shop in the country, but the policy change may not be enough to upend sponsors.
In the Autumn Statement, U.K. Treasury Chief George Osborne abolished the stamp duty on investments purchased by fund managers from U.K. domiciled ETF providers as of April. [United Kingdom Courts ETF Providers]
Osbourne argued that making units in ETFs exempt from the stamp duty would encourage funds to domicile in the U.K., reports Jon Yarker for MoneyMarketing.
“This announcement is a further important step in a series of significant changes made by the Government over recent months to make the UK a more attractive location for investment funds to be based,” Julie Patterson, Investment Management Association director of regulatory affairs for investment funds and retail, said in the article.
“This is a positive development for investors and effectively creates a level playing field for local and foreign ETF domiciles.” Axel Lomholt, Vanguard head of product, added in the article.
Some market observers are skeptical about the effectiveness of this move to attract fund providers, pointing out that the costs outweigh the benefits.
“The change is probably insufficient to entice major ETF providers out of their existing locations,” Ben Gutteridge, Brewin Dolphin head of fund research, said. “This is due to a combination of factors including a well established and successful financial infrastructure, prohibitive relocation costs, and more favorable corporate tax rates.”
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